EnergyAustralia is taking a closer look at an overlooked section of the electricity grid – the section that brings power from distribution substations to end customers.

The utility is spending $170 million over the coming years to install about 12,000 sensing devices along its distribution grid, one of the biggest projects of its kind in the world so far.

The idea is to let the utility know where power outages are occurring so it can fix them faster, as well as sense where power lines are failing to fix them before that happens.

It's an often-overlooked part of utilities' so-called "smart grid" efforts, said Michael Valocchi, lead energy and utilities consultant for IBM's Global Business Services division. IBM has a $3.2 million contract with EnergyAustralia to manage and integrate the data from its distribution sensor project.

But fixing outages faster and replacing equipment before it fails is just the beginning, Valocchi said.

"The next stage is, what could you do with reliability-centered maintenance, and also bringing all the data into one common view," he said. "There are probably things that we're not imagining yet, once you put this together and give it to a control room operator, or the head of maintenance."

EnergyAustralia will use sensor devices from Danish company PowerSense, which has been involved in pilot projects with a number of European utilities, including Danish utility Dong Energy.

IBM, which also managed that project, found in a 2007 report that Dong Energy was able to cut outage response time by as much as half, reduce the time it took to locate faults by one-third, and save up to nine-tenths on the cost of going out and doing grid maintenance and upgrades by using remote monitoring.

Many utilities have focused their early smart grid efforts on installing smart meters for their customers – a move that first cuts down on labor costs for meter reading, but may lead to future energy savings by giving customers tools to monitor and reduce their energy usage (see The Year in Smart Grid and Smart Meter Installations Grow Nearly Fivefold).

But the EnergyAustralia project is "beyond smart meter implementation – this is starting to get into some of the true grid issues," Valocchi said. "We're going to see more and more of this."

Plenty of utilities are already working on distribution monitoring and control, said Rick Nicholson, vice president of research for IDC company Energy Insights.

"The bulk of the transmission system by and large, to the substation level, has been pretty automated," he said. Now, "the main focus is distribution."

Brian Seal, a senior project manager with EPRI, said that distribution grids already have a plethora of devices meant to cut down on the number of homes without power during an outage, and "they're automated, and there are technologies to bring them online and offline at the best times," he said.

But new forms of sensors and communications can help utilities in other ways, he said.

"One of those could be the collecting of data, frequently and in real time -- taking things a utility would know once a day or once a month, and making that information constantly available," he said.

Nicholson added that the future challenges will include integrating distributed generation sources like rooftop solar panels and plug-in hybrid and electric cars.

"As you start to add more distributed generation, if you have more sensors and a higher level of automation, the theory is you can cope with those situations much more easily," he said.